A banker-turned-politician Eran Wickramaratne, Sri Lanka’s deputy minister for highways and investment promotion, says trade and investment with India can grow exponentially. He, however, makes a strong case for reduction in non-tariff barriers (NTBs). In an interview with Sanjay Jog, he explains how both countries can prosper and help the region grow.
The heads of India and Sri Lanka have said economic ties are the pillars of the relationship between the two nations. What is your take?
There has been normalisation of relations since the change of presidency in Sri Lanka after January. President, Maithripala Sirisena visited India and Prime Minister Narendra Modi visited Lanka. This is significant. In the past, the relationship was more politically driven. In future, it will be driven by economic partnership. That’s the way to go.
India is a large country, a large potential market for Sri Lanka, is a small country, with an educated workforce, good infrastructure, good communications and logistics. Lanka can make all that available for Indian companies which to source from the region and sell elsewhere.
What are the major blocks in increased economic and trade relations?
Sri Lanka has to be a little higher in the value chain. It has lots of professional services that could be used in business process outsourcing at the higher end. It is now ready for manufacturing.
Some of India’s problems are to do with non-tariff barriers (NTBs), India has to work across several states. But Sri Lanka offers one jurisdiction, one administrative state. Therefore, it is easier to do business.
Both countries need to grow. However, NTBs have caused some apprehensions among Lankan businesses. India and Lanka have a free-trade agreement (FTA). Trade has increased but it can grow exponentially if both work together towards reducing NTBs.
Any other hurdles?
NTBs are the largest block. India also needs to liberalise export of value-added products, and design and marketing services. For example, Lanka is a tea exporter but is not talking about bulk exports of these to India. India has a natural advantage, it has a lower base and that is why Lanka imports a lot from India. The trade balance is heavily in favour of India. For the two countries to grow, we need to look at Lankan exports to India.
Have the countries fixed any targets?
I would not put a number. India and Sri Lanka can even expand the FTA into a comprehensive economic partnership but (Indian officials) have to deal with the issues of NTB and build confidence on both sides. If we build that confidence, the sky is the limit.
What are the key sectors where both India and Lanka can further strengthen economic ties?
Manufacturing, tourism, power, roads, highways, ports and several others. India is building a coal-based plant; Lanka recently signed a preliminary agreement. Further, Sri Lanka can benefit from India’s civil nuclear programme.
What about India’s banking sector?
Indian banks have been in Lanka for a long time. The Lankan banking system is fairly advanced and modern, after being liberalised in 1977. Multinational banks came in at that time and we have a couple of them. There will be consolidation of banking industry in Lanka and when they do so, the only destination for them to look at is India.
India wants to counter China’s strategic influence in Lanka. Your comment?
Sri Lanka has a long-time relationship with China which is one of the two Asian economic powers. Therefore, no country can ignore India or China.
India’s relationship with China has grown in recent years … trust is beginning to grow. As that relationship grows, so does the relationship between India and Lanka. Our economic relationships with both India and China must grow. (The) Chinese have stood with Lanka in bad times, too; we appreciate that. There is room for both the relationships to grow.
Will Pakistan’s growing relations with Lanka work as a speed breaker?
Our relationship with Pakistan has been even-handed. Pakistan has been a friend of Sri Lanka and continues to be one. Sri Lanka’s strong relations with Pakistan can be a bridge between India and Pakistan, not only economically but politically. We have an FTA with Pakistan, too. Indian and Pakistani companies could profit by using Sri Lanka.
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